01/20/2012 05:19 pm ET Updated Mar 21, 2012

Will Pay for Status

There are lots of ways to show other people that you have status. I travel a lot, and the airlines treat frequent travelers specially. At the start of the boarding process, the people who fly a particular airline often get on the plane first, and are often given upgrades to first class. Everyone else on the plane has to walk by the people in first class as they get on. So, the people sitting in first class get a chance to feel special.

How much is this kind of status worth?

An interesting paper by Aarti Ivanic, Jennifer Overbeck, and Joseph Nunes in the Decemner 2011 issue of Psychological Science suggests that these kinds of status markers are particularly valuable to people who see themselves at a social disadvantage.

They addressed this question by looking at how much African-Americans and Caucasians are willing to pay for luxury goods in different circumstances. The idea is that in the United States, many African-Americans feel like they get poor treatment in consumption situations. Studies show that African Americans report feeling like they are not valued by stores.

In one study, African-American and Caucasian participants were asked how much they would be willing to pay for high-end noise-canceling headphones. Before making this judgment, some participants were asked to think explicitly about race. They were shown a set of behaviors and were asked to classify them as behaviors more stereotypical for white Americans or African-Americans (or whether there was no difference). A second group saw a series of behaviors and classified them as stereotypical of people who live in Los Angeles or people who live in the rest of California. When participants explicitly thought about race at the start of the study, the African-American participants were willing to pay more than twice as much for the headphones as the Caucasian participants. When they did not think about race, there was no difference at all in the amount that African-American and Caucasian participants were willing to pay.

In another study, participants viewed a set of behaviors and either classified it as stereotypical of white Americans and African-Americans or they classified the behaviors as characteristic of themselves. Then, they evaluated a hypothetical vacation package. As part of this evaluation, they were asked how much they would be willing to pay to upgrade their room and their flight. Participants also filled out a scale for perceived social discrimination that measured how much they felt that other people received more attention than they did.

Once again, African-American participants who thought explicitly about race were willing to pay much more for upgrades than Caucasian participants who thought about race. When race was not explicit, there was no difference between the African-Americans and the Caucasians. Other analyses of the data demonstrated that the willingness to pay more for upgrades was related to the perception of social discrimination. The more that African American participants who were thinking explicitly about race felt that they were at a social disadvantage, the more that they were willing to pay for upgrades.

In the U.S., the outward markings of success are for sale. We can buy fancy cars, watches and clothing. And on vacations, we can buy upgrades for rooms and flights. There are many reasons to make these purchases, and one of them is to display high status. As these data suggest, the value of these status symbols is particularly high for people when they are feeling that they are being discriminated against.

If you find yourself in a situation in which you are tempted to pay for a symbol of status, it might be best to give yourself a cooling-off period before deciding how much you want to pay for it. In the initial rush of thinking about these perks, you may overpay.

For more by Art Markman, Ph.D., click here.

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